The China-based Huawei and ZTE could see more troubles from the United States. This is evident from the American President’s thinking of proclaiming an order barring the domestic companies from using any telecommunications equipment manufactured in China. The emergency order is expected anytime around New Year. This will undoubtedly hurt the two Chinese technology firms and could come in the wake of the arrest of a top executive in Canada at the instance of the U.S.
The Trump administration believes that the two Chinese companies are hand in glove with their government and that their equipment could be a tool to spy the Americans. If the order is issued in the New Year, there is no doubt that it will drive Huawei Technologies and ZTE out of the American market. The two companies are the biggest network equipment firms in China. The move has been in the air for over eight months since the administration thinks that these telecommunication manufactured equipment provide national security risks.
Therefore, the possibility of the Commerce Department getting the directive to bar the American firms from purchasing equipment from the two leading Chinese enterprises have brightened. At the same time, the order will not likely name any specific enterprises to be it Huawei or ZTE though it provides a tool to the department to curb its spread in the United States. However, the text of the order is yet to be finalized, and the order might invoke the International Emergency Economic Powers Act.
The Act provides sufficient authority to Donald Trump to streamline commerce if the President finds a threat to its national security. There is an urgency now since the wireless carriers in the United States are looking for partners ahead of the launch of the 5G next-generation wireless network. Significantly, it was only in August that a defense policy bill has curbed the American administration from using the two Chinese firm’s equipment.
Though the two companies have refuted the charge that their products could be used to spy the Americans in the past, they are yet to react to the latest developments. If the order comes into effect, operators in the rural region could get hit since the two companies’ products are widely used there. The operators also fear that the order could also drive them to dump the existing China-made equipment. However, opinions differ among the industry officials whether the administration could force operators to do it. In short, the smaller enterprises are going to be hit hard since bigger firms have already reduced their alliance with them.